Athens International Airport S.A. ($AIA)

Ladies and gentlemen, thank you for standing by. I am Gailey, your Chorus Call operator. Welcome, and thank you for joining the Athens International Airport Conference Call and Live Webcast to present and discuss the full year 2025 financial results. [Operator Instructions]. The conference is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. George Eleftheriou, Manager, Investor Relations. Mr. Eleftheriou, you may now proceed.

Thank you. Thank you, operator. Good afternoon, ladies and gentlemen, and good morning to those of you listening to us across the globe. Welcome to our conference call of Athens International Airport financial results for the fiscal year of 2025. Please note that the digital playback of the conference will be available from about 1 hour after the conference call has ended until April of 6. Today, in the call, I'm joined by our new CEO, Mr. George Kallimasias; our CFO, Mr. Panagiotis Michalarogiannis; our Director of Financial Services, Mrs. Nadia Xirogianni. Also, let me mention that the presentation today is available on our website on the section of quarterly results under the Financial Information page. With that, I would like to pass over to our new CEO.

Thank you, George. Hello, everybody. Thank you for attending this earnings call for the year 2025. Starting with the summary Slide #4 with the key messages for 2025. I would say these are strong traffic growth, on target financial performance with solid profitability and commencement of the airport expansion construction. Last year, traffic grew by 6.7%, reaching 34 million passengers, which is a record number with main growth driver our international traffic. Our key traffic characteristics have remained unchanged. We are mainly a leisure airports, leisure traffic airport with a high share of O&D and a relatively small transfer segment feeding the key tourism destinations and with a growing portion of international traffic. Our revenue last year grew by 1.5%, which was in line with our expectations. Air Activities revenue growth was below traffic levels, and this was aligned with our targets, reflecting the airport charges adjustments further to the carryforward depletion. We will talk more about this later in the presentation. Our Non-Air Activities revenues grew more or less in line with the traffic growth. Adjusted EBITDA at EUR 394.5 million, reflecting the aforementioned planned adjustment of the Air revenue segment, and we spent EUR 161 million in CapEx, mainly driven by the airport expansion project and the Routes 2025 investments. And following solid profitability in line with our dividend commitment, we will propose distribution of a gross dividend at approximately EUR 0.66 per share. Moving on to the next Slide #5. As mentioned, traffic grew by 6.7%. International segment grew faster with 8.6%, and we saw a modest growth in the Domestic segment by 2.2%. We have a remarkable growth from the post-pandemic period of 33%, and we will discuss this also further in the context of European airports performance. Our network grew to 164 routes in 2025, up from 157 routes in the context of prior years, and this reflects enhanced connectivity and market demand and of course, a successful airline marketing and route development strategy of the company. In terms of seasonality, if you look at the chart on the right-hand side, we remain a relatively seasonal airport. However, as you can observe, the growth rates were stronger in the off-season months, aligned with our airports for a smoother seasonality profile. Moving on to the next slide, Slide 6. In 2025, we made progress -- we made progress in our aeronautical and commercial activities. We had a significant increase of destinations and routes. We also had progress in commercial activities, industry recognition and operational planning. Our home-based carriers expanded further, adding 10 new destinations on existing routes, while the airports added 6 new destinations overall. We also welcomed several new airlines contributing 17 new network developments, including 10 new destinations. I think important developments were related to our long-haul footprint with new services such as Charlotte with American Airlines in the U.S. and Chengdu in China by Sichuan Airlines. In the commercial development, we continue to upgrade the passenger experience with new concepts, store enhancements and a stronger Best of Greece proposition while also benefiting from improved traffic mix coming especially from the high-spending markets. These achievements overall have been recognized last year with major distinctions from Routes World and ACI Europe, and I think it's important also to note on operational development, which relates to our change of status from non-coordinated to schedule facilitated, which allows for a smoother traffic growth during nonpeak hours, addressing also our ATC constraints. We have also applied for becoming coordinated airport for the winter season of '26, '27 due to the scheduled-heavy maintenance works on our runways. Let us move now to Slide 7, which shows the performance of our airports in the broader European context, where our '25 results show the strength of our recovery, our competitiveness and the growing relevance of Athens within the European airport landscape. In 2025, as we mentioned earlier, we had a 6.7% growth and Athens outperformed most of its direct peer group and the wider European airport market. But I think it's more important when we compare our traffic development with pre-pandemic 2019 levels, where Athens demonstrated a growth of 33%, significantly ahead of all benchmark groups, which remained in the mid- to low single-digit range, and this makes Athens the airport with the strongest rebound momentum in Europe within our peer segment. Very important to look at the bottom chart as well. Among the European mega airports, Athens moved in terms of connectivity from 21st place in 2019 to the 2nd place in 2025, and these connectivity gains confirm that the progress that we have demonstrated over the last year is structural and not temporary. We are becoming an increasingly important aviation hub with one of the strongest connectivity profiles in Europe within our segment group. Moving on to Slide 8 with a few important developments of the company last year. First of all, our 2025 Scrip Dividend Program, which we launched last year after the relevant approval from the general meeting. This program in the last year showed a very strong shareholder participation at 89.2% and generated almost EUR 85 million for Air Activities Capital. As I said, this was the first year of implementation of this 4-year Scrip Dividend Program, which was announced last year, and this program supports our accelerated long-term investment program and is in line with our regulatory framework. Second development with regards to the depletion of the carryforward amounts, again, in line with our regulation and further the consultations with the airlines, we introduced a temporary 30% reduction in the passenger terminal facility charge to incentivize growth during the offpeak period. And we also introduced a Sustainability Support Scheme that rewards higher load factors and more fuel-efficient aircraft with a rebate on a per departing passenger again on the PTF. These initiatives intend to support competitiveness, off-peak growth, as I mentioned, and of course, environmental objectives. Third, on leadership, Yiannis Paraschis stepped down at the end of January '26 after 19 years of a highly successful term as AIA CEO. And finally, following the London Court of International Arbitration ruling on the Greek state rentals, the company recognized a EUR 16.3 million one-off impact in 2025, which was effectively neutralized through the allocation of this cost to the air activities till. Moving on to the next Slide 9 with our expansion program, which is advancing in line with our long-term strategy. This is a EUR 1.3 billion investment program in terms of 2024 prices, bringing together our MAP33 and MAP 40 plants into a unified development road map with full completion targeted for 2032. We have already started making tangible progress across the different components of this program. First of all, let me start with the projects that have been awarded and are already under construction. The VIP Terminal and Apron with completion expected in 2027, also the new apron area, which has also been awarded and construction has commenced. This project will add 32 code C remote stands in the northwest part of our airport and is also expected to be completed in 2027. Third, the multi-story car park with construction also underway. This will provide approximately 3,500 parking positions and is also scheduled for completion in 2027. The largest element of the expansion is the expansion of the Main and Satellite Terminal buildings. Once completed, this project will add approximately 150,000 square meters to our facilities and will more than double our commercial space. The outline design has been completed in 2025 as planned, and we are currently at a tender process through an early contractor investment approach with the design and build award expected in the second half of 2026. This time shift to the second half is mainly driven by the request of the bidders to ensure that their proposals are aligned with our requirements for construction-phasing and gradual capacity delivery. Very importantly, for our total project, totalized project, capital deployment is phased with about 50% of the CapEx expected by 2028 and the remainder by 2032. And in terms of funding, we have secured EUR 800 million financing through a bank loan, and we have additional support of EUR 240 million scrip through our Scrip Dividend Program. Moving on to Slide #10 with our proposed dividend distribution and the 2026 Scrip Dividend Program. This, as I said, is the second year of our approved 4-year Scrip Dividend Program to collect up to EUR 240 million. The Board is proposing -- the Board of Directors is proposing the distribution of 100% of available for distribution net profits equivalent to approximately EUR 0.66 per share. And as in the previous year, the proposed structure combines a cash dividend with a voluntary scrip alternative using the same pricing calculation methodology that we applied successfully last year. For 2025, the total proposed dividend amounts to EUR 204.86 million, comprising a cash component of EUR 104.86 million and a voluntary scrip component of EUR 100 million. This structure gives shareholders the flexibility to elect either shares or cash, supporting the company's capital planning and regulatory returns. I think it's important to note here that we have received favorable intentions of participation from our two major shareholders, AviAlliance and the Growthfund. And in terms of process, the Ordinary General Meeting is scheduled to take place on the 15th of April, and subject to approval, of course, the dividend distribution process will run from late April until mid-May, with payment and new shares trading commencement planned and expected for 15th of May 2026. On the next Slide #11 on sustainability. This was an important year because we completed our Route 2025 plan. And as a result, we achieved Net Zero carbon emissions from the beginning of 2026. This was a milestone that was supported by major investments in clean energy infrastructure, which included the completion and operation in '25 of a solar park of 35.5-megawatts together with an 82-megawatt hour battery energy storage facility as well as heat pumps, which substitutes the natural gas consumption with clean energy and electrification of vehicles. The Route 2025 initiative was not just a bold achievement in sustainability, but has also a positive financial impact for the company. So by the end of 2025, we have reduced our CO2 emissions by 60% compared to baseline year of 2005. And I think it's important to note that we are the first European airport to cover 100% of our electricity needs through on-site clean energy production. Overall, this Route 2025 milestone strengthens not just our environmental leadership, but also protects us and provide us resilience against energy costs and energy cost volatility. And with that, I would like to hand over to Nadia for the financial performance overview.

Thank you. So turning to the company financial performance over the last year. We recorded total operating revenues, excluding the accounting treatment of the -- for the airport expansion according to IFRS. Total revenues of EUR 675.6 million, this is a year-on-year growth of 1.5%, demonstrating the airport charges pricing policy and the very good performance of the Nonregulated segment. In more detail, the Regulated segment represented 75% in terms of revenue, broadly stable compared to the previous year as we had proceeded as the CEO, explained at the beginning with temporary reductions, temporary incentives in the airport charges -- and we -- you will also see in the following slide, we almost depleted the carryforward amount, the unrealized profit of the previous year. And this brought the Air Activity segment very close to the regulated cap. The Non-Air Activities, the Nonregulated segment, the remaining 25% of our revenues increased year-on-year in line with traffic, 6.5%. So overall, we achieved the guidance, our target of EUR 5 per passenger on the Non-Air Activities. The successful performance mainly -- is mainly driven by the terminal retail performance, with main drivers, the well-balanced commercial offering portfolio we have, the increase we experienced in the International segment and especially in handing in high spending markets and of course, inflation. At the same time, the terminal retail performance managed to more or less offset some headwinds we experienced due to the fact that we closed the short-term P1 car parking area because we started construction for the multi-story car parking, so the overall growth of this segment experienced a slowdown. If we move now to the operating cost of the company. Overall, in 2025, we recorded operating expenses, again, excluding the IFRS impact of the airport expansion at EUR 265.6. This includes the variable portion of the Grant of Rights Fee, EUR 48.6 million. This is calculated on a formula and is increased compared to the previous year because this is based on increased profitability. Additionally, we recorded on the operating cost, the one-off item, the net effect of the unfavorable outcome of the LCIA arbitration in relation to the Greek State rental, EUR 16.3 million. But I need to repeat here that the impact -- this impact is effectively neutralized at profitability level. Excluding Grant of Right Fee and the Greek State rentals impact, the remaining operating costs were at EUR 200.7 million which is an increase of 7.9% year-on-year. The overall operating cost per passenger is at EUR 5.90 per passenger, and the increase is mainly driven by the fact that we need to deploy additional resources to address high traffic and protect our service levels. We adjusted several outsourcing contracts to reflect the increase in minimum wages increased over the last year. And we increased also the provision for major restoration, major reservicing in the runway that we'll perform and the full replacement of the airfield lighting. Now in relation to our profitability, we recorded profitability on target in terms of adjusted EBITDA, this is at EUR 394.9 million with adjusted EBITDA margins 58.5% in line with our short-term target. And in terms of net profit overall at EUR 207.3 million, we see now a structural shift in the share of Air Activities and Non-Air Activities in net profitability. Air Activities now account for 54% of total net revenues and there is growing share of Non-Air Activities profitability. So Non-Air increased from EUR 90.9 million net profit in 2024 to EUR 95.5 million, while in Air Activities because of the distribution of the carryforward amount, we, as expected, recorded a decrease overall. The dividend per share as proposed is EUR 0.66 per share. Some more details on the regulated fee in the following page, Page 16. The Air Activities Capital following the successful implementation during the first year of the increase of the equity through the Scrip Dividend Program at the end of 2024 was at EUR 641 million. This, as you remember, is inflated every year with the new inflation and now increased through the Scrip Dividend Program. We managed in 2025 to deplete the carryforward amount that was at EUR 22.4 million at the end of 2024. So we leave a marginal amount of EUR 2.6 million at the end of 2025. So the implied return on Air Activities Capital in 2025 was EUR 18.3 million, and just to note here that 1st of January 2026, following the inflation we apply in Air Activities Capital, we have EUR 655.5 million Air Activities Capital, which hopefully will be further increased with the second year implementation of the Scrip Dividend Program. Now in the next page, you may also find some more information on the cash flow and financial position of the company. Apart from the very healthy profitability, we also have strong operating cash flow generation. In terms of free cash flow, the metric we have, which is the adjusted EBITDA minus the CapEx in 2025 was at the level of EUR 233.9 million. It represents a decrease compared to the previous year as expected because we are now entering in a CapEx-intensive era. However, we need to stress again that at this point of time, we have secured financing through the debt agreement arrangement we have and the Scrip Dividend Program until 2028 and 2029. So financial stability is fully safeguarded. And also another metric in relation to net debt at the end of 2025, net debt is at EUR 614 million with leverage, the net debt to adjusted EBITDA metric still low, very stable with previous year, 1.6x, leaving more headroom -- leaving headroom for additional leverage. And with that, we go now to the final remarks for the outlook, which the CEO will present.

Thank you. Thank you, Nadia. Thank you very much. Looking into the outlook for 2026, but also for the medium term. I think this reflects a balanced view of what we see as growth opportunities and disciplined execution of our business plan, but within a more uncertain external environment, which is protected to a significant extent by our regulation. Now for our passenger traffic, we expect low single-digit growth for 2026, which is in line with our medium- to long-term projections. Our demand fundamentals remain supportive. However, we continue to monitor the geopolitical development very closely. The tensions in the region have added an element of uncertainty. And as a point of reference, we mentioned that traffic from the affected traffic -- affected countries in the Middle East accounted in 2025 for about 7.5%. However, we need to stress here again that our regulatory framework offers considerable downside protection. Now from a revenue perspective, in Air Activities, we expect broadly a flat yield per passenger within our stable regulatory framework. Our regulated profits are expected to be aligned with our 15% return on equity target, supported also by the multiyear Scrip Dividend Program. In the Non-Air Activities, we see more limited upside in the medium term, particularly in the Terminal Commercial revenues, reflecting space, the current space constraints that we are facing and the impact of the early-stage construction activity. The Car Parking revenues will also be modestly affected during the multi-story parking construction period, although this is partly offset by the additional parking capacity that we have offered. At the EBITDA level, we expect some temporary pressure as construction activity under the Airport Expansion Program will intensify. So as a result, the adjusted EBITDA margin is expected to be around 100 basis points below our long-term target of 60%. For the net income, we project currently a level of approximately EUR 200 million for 2026. And we maintain, of course, our commitment to dividend policy at 100% of available profits for distribution. The execution of the Airport Expansion Program remains a central strategic priority for the company. For the Main Terminal and Satellite Terminal with the expansions, as mentioned earlier, we expect to complete the ACI tender and award the design and build contract in the second half of 2026. Our capital deployment remains phased and disciplined with up to 50% of totalized CapEx expected by the end of 2028 and the remaining balance through the end of 2032. And I think it's important also to stress here the fact that we have secured already financing for the AEP through to '28 to '29. Overall, we remain confident in the resilience of the business and our ability to deliver sustainable long-term growth. So thank you very much for your attention, and now we are happy to answer to any questions you may have.

[Operator Instructions] The first question is from the line of Draziotis Stamatios Eurobank Equities.

A couple from my side, please. Firstly, on inflation, I understand that the Aviation segment is structurally protected through the indexation of the regulatory equity base. But could you elaborate more specifically on the Non-Air segment where the dynamics are less straightforward. I mean, how should we think about the balance between cost inflation and your ability to pass this through to concessionaires either via minimum guarantees or revenue sharing mechanisms? And I guess, ultimately, do you see inflation as net margin accretive, neutral or dilutive for the Non-Air business? So that's the first question. And secondly, I'm just wondering about the current terminal capacity constraints and the passenger flow dynamics. So I'm just wondering, could a softer traffic environment due to the Middle East situation actually support higher per passenger monetization as passenger experience improves basically? That's my question.

May I answer the second question, and Nadia can take the first one. Well, no, I think, of course, as you correctly mentioned, there are limitations in our terminal space, and we have explained that in the past also. And for this purpose, we have launched and we are implementing our expansion programs. We do not think that this -- any shortfall in traffic from these segments is going to be essentially, how to say, supporting the considerably the ability of the other passengers to -- for commercial spending. I think this is -- the Middle East traffic is not materially important in terms of traffic numbers. As we said, it's 7.5%. It's not insignificant, but it's not a dramatic amount of passengers. But I would say that there also good spenders in retail. So I would not see a significant positive sign from that. And Nadia, maybe you want to answer...

Yes. As regards the inflation, as you, of course, correctly said, this is taken into account in the Air Activities segment in the inflation of the Air Activities Capital. So the return is on the inflated equity. And then on the Non-Air Activities, the terminal retail sales are adjusted, of course, you can imagine, according to inflation. Prices are adjusted. Our minimum annual guarantees are also taking into account inflation, rentals. And generally, the margins of the Non-Air segment are significant. So one can expect that we recover the impact of inflation also in the Non-Air Activities.

Okay. So just to follow up and conclude. So as a total for your business, the inflation should be a net positive clearly, right?

Yes.

The next question is from the line of Lobbenberg Andrew with Barclays.

Can I ask one simple question on the numbers, I guess, for Nadia. Can you -- I know you've told us half the CapEx by '28. Can you give us an indication of what the total CapEx will be for '26, for '27, for '28? Can you phase it over that period, please? Second question, how confident are you that you will have kerosene available at Athens into the future? Given the challenges in the Gulf. How long have you got confidence that you'll continue to have kerosene? How do you see the kerosene availability playing out? And then a third question, and it's pretty obvious, I guess. How are you -- what assumptions are you making about the loss of Mid East traffic in giving us this low single-digit guide? Because obviously, that looks incredibly low compared to what we saw in Jan and Feb before the war. So yes, how much loss of that 7.5% have you baked into that low single-digit estimate?

As regards to the first one, just as a reminder, at this point of time, we have the total estimate of EUR 1.3 billion at 2024 prices for the entire expansion. What we have spent in 2025 was less than EUR 100 million. We say, we keep the guidance of 50% until 2028, and we will have more visibility following the award of the terminal expansion in the second half of the year. So unfortunately, at this point of time, I cannot give more clarity on the year-on-year projection.

And on the second and third, Andrew, thank you for your questions. On kerosene, well, I don't think we're any better or worse than other European countries. I can say the following. We have production of kerosene in Greek distilleries. There are strategic reserves both in the airport of aviation fuel, but also in the distilleries, there are strategic reserves of fuel. I would say that we don't see currently any alarming signs. But as I said before, I don't think notwithstanding the fact, as I said, that we do produce kerosene in Greece from the distilleries. I don't see that we are -- if there is a global or European crisis in the availability of kerosene, I think that we will more or less be in the same situation with the rest of the Europe and European countries. In terms of the traffic with low-single-digits. This is in accordance with the projection, in accordance with information available. In March, we expect a growth of mid- to low single digits, which is less, however, than the average, as you mentioned, that we experienced in the first 2 months. So this is the impact of the crisis in March. Obviously, this can change subject to the events developing.

Okay. So does that imply that your traffic forecast allows for the continued loss of Mid East traffic going forward?

I would say it allows for a similar scale of effect that we are experiencing now. We see also that there is a partial reinstatement of operations from some of the countries, Israel, Jordan, Lebanon, Qatar, Saudi Arabia and UAE. We don't have any operations in with Bahrain and Iraq. And -- but of course, the load factors are lower and Aegean and Sky Express have suspended operations to the Middle East. So this is overall the impact. Of course, we have some positive impact from repatriations. But overall, at the current level of impact, we are confident that our low single-digit growth that we project is achievable.

The next question is from the line of Shankarhari (sic) [ Harishankar ] with Deutsche Bank.

A few from my side. Firstly, on the capital Scrip Dividend Program, you're into EUR 200 million -- close to EUR 200 million out of the EUR 240 million now. Any scope for further expansion there? And then secondly, on to your operating expenses. I believe that some times back, you probably guided to around EUR 6.3 in OpEx per [indiscernible] for 2025. And on an underlying basis, you probably land at EUR 5.9. So any indication on what that could be for 2026? And maybe continuing on the theme of operating expenses. In terms of the allocation between Air segment and Non-Air, do you see similar trends continuing into the next year as we have seen in '25?

So as regards to the first one, the scrip dividend, the program now is, as we said also last year, for a total EUR 240 million, there is no plan at this point of time for any additional equity increase or further Scrip Dividend Program. As regards to the operating costs, which you -- yes, it's correct. We managed to be more cost efficient compared to what we had expected. We contained cost and therefore, we have achieved this EUR 5.90 per passenger, excluding the one-off impact. We will continue to monitor the cost very closely. And we will target, of course, to the best margins, both in Air and Non-Air Activities. As regards to the allocation, there is no expected change in the drivers, in the main drivers of the allocation between Air and Non-Air Activities in 2026. There are expected shifts following the completion of terminal expansion. So for the time-being, we expect allocation to be similar to the ones we have now.

The next question is from the line of Mora Nicolas with Morgan Stanley.

Just a couple on my side. First on the tariff guidance for '26. So you're pointing to flat tariff in aviation. Does it mean that you want to signal the first tariff hike for airlines from summer schedule '26? Is that -- and looking even beyond '26, is that for you the start of an uptick in tariff going forward? That's the first question. The second, just coming back on the impact of Middle East and on -- especially on retail. So Middle East makes up 7.5% of traffic, but I suspect they make up a larger amount of the retail spend. Could you -- I mean, is it 2x the traffic share, so around 15%? Just trying to gauge also the -- not just the impact on traffic and aviation, but also on your Non-Air Activities?

So as regards to tariff, we also continue the Sustainability Support Scheme in 2026. The temporary reduction in the passenger charge, the 30% continues until the end of April. And other than that, charges will not change in the remaining of the year. So we will reinstate the previous level of passenger charge and all the remaining charges. Overall, the -- what we expect as revenues per passenger from the Air Activities segment in 2026 is similar to the one we had achieved in 2025. And we expect that we will reach this way, the maximum allowable profit. Now in relation to -- I don't know if this answers your question in relation to the tariffs. And going to the Middle East, the impact of the Middle East traffic, of course, it's an impact on traffic and the aeronautical revenues. And this also has a proportionately higher impact on the Non-Air since we experienced higher spending per passenger from this segment. So yes, the impact will be proportionally higher than the aeronautical -- than in the aeronautical segment.

On that front, is that -- I mean, we've heard from other airports talking about potentially up to 2x, 2.5x higher share of retail. Is this something you would confirm? Or this is potentially higher or lower versus your typical average spender?

No, we cannot provide exact numbers of the segments. We don't have exact data of each segment on our overall retail. So no, we cannot confirm exactly these amounts.

[Operator Instructions] The next question is from the line of Memisoglu Osman with Ambrosia Capital.

Just on the Airport Expansion Program timing and the related impact on Non-Air. So you mentioned awards in H2. Are you able to give a bit more color on when in H2, early, late? Any color there would be helpful. And then related to that, when do you expect -- you guide for some limitation on Non-Air revenue growth because of this. When do you expect the construction work to start? And when do you expect to see the biggest impact on Non-Air from the expansion program?

Thank you, Osman. Well, no, we cannot say exactly when in H2, we will have the awards as this is also a tender ongoing, it's rather also sensitive information to disclose. Now on the construction, so if we have a commencement -- or sorry, award of the project in H2, it's reasonable to expect because it's a design-build project to expect construction to start in '27. The main impact on retail will be around, I think Nadia its '28 to '30...

'28, '26. So we do not expect impact from construction definitely in 2026.

No. That's why we said in our guidance, we are talking about the midterm impact on our retail activities.

Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Kallimasias for any closing comments. Thank you.

Thank you very much. Thank you. Thank you for your interest in our company. Our team remains available with George Eleftheriou also for any further clarifications in the future. Thank you once again for your consistent interest and support to the company. Thank you very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.